Financial Management: Importance, Role of Manager, and Sources of Finance

This report discusses financial management, its importance, the role of a financial manager, and sources of finance for organizations. It covers short-term and long-term finance options available to businesses. The report emphasizes the significance of financial planning, protecting funds, and making sound financial decisions. The sources of finance discussed include bank loans, angel investors, secured loans, and commercial banks.

Task 4

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
What is financial management....................................................................................................3
Importance of financial functions within organizations..............................................................3
Describe the role of the financial manager within company.......................................................4
What sources of finance are available to an organization? What options does a business have
to get capital to start the business – mention short term and long term finance options............4
CONCLUSION ...............................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
In business financial management is defined as a set of financial practices which is used
by organization. Due to the effective use of financial management company is able to run the
financial activities smoothly. Strong financial management helps the firm to decrease financial
loss and expenditure in their activities for long time. The report will cover explanation about
financial management, importance of financial management within organization and others. It
further covers describe the role of financial manger within organization and the sources of
finance.
TASK
What is financial management
The finaancial management is basically considered with various business functions which
includes profitability, expenditure, cash and credit (Al-Blooshi and Nobanee, 2020). An example
of financial management is the work accomplished by an accounting department for
orgaanization. The main work of accouting department is to control the cashflow of complany in
efficient manner for long time. Without the accounts departments company is not able to sustain
their performance and productivity for long time. For all types of business activities whether it is
hr or marketing, the accounts departments will take final decision regarding providing fund to
them.
Importance of financial functions within organizations
For organization financial management have various importance which are given below -
 Financial planning – It is one of the important element for organization regarding
financial activities. With help of effective financial planning organization is able to run
their activities in smooth and systematic manner. With help of planning company is able
to reduce their financial loss at higher rate.
 Protecting funds – This is the sercond important aspect of financial management of
financial management within company. One has to measured the areas where cash are
needed and allocate it in effective manner in various areas for running the functions
smoothly. Overspending on one project and impact other business operations as they may
lack finance in many cases.

 Financial decisions – Once the financial decisions are made according to the situation of
business it did not be changed. Therefore, right financial decision are highly important
for maintaining positive relationship between all departments. It also assist the firm for
promoting their product effectively in market.
Describe the role of the financial manager within company
There are various roles which is which is played by the financial manager within company and
those are -
 Estimating the fund according to requirement – The primary duty of finance manager
is to generate funds which is needed for specific time period. During the time of
calculating funds the manager need to consider fund requirement in both short term and
long term requirements.
 Formation of capital structure – The ultimate aim of financial manager is to maximize
the wealth of stakeholders and minimizing the cost of capital (Azar, Raina and Schmalz,
2022). This is totally based on the company capital which is owned and the amount need
to raise from the extra source.
 Allocation of funds – During the time of using proper allocated finance to assets it
increase the efficiency of operational and other activities of business. Whenever the
financial manager makes utilization of the funds effectively and allocating it wisely, they
easily decrease the business expenditure and enhance the capital estimated for a
organization.
What sources of finance are available to an organization? What options does a business have to
get capital to start the business – mention short term and long term finance options
The various sources of finance are -
Long term sources of finance are -
 Bank loan – It is one of the common type of source which is used all type of small and
medium-sized businesses for borrowing their amount according to their requirement.
While consider this type of source for funding the company required to repay the
particular aamount in specific time period. Due to this company needs to run their
activities in systematic and effective maanner for long time.
 Angel investor – It is also a one type of source which is used by organization for
borrowing the amount according to their requirements. The main advantage of this type

of source is that here no particular time period are fixed for repaying the amount. Due to
providing flexibility organization is able to sustain their performance and productivity in
long term.
Short term sources of finance -
 Secured loans – It is also a one type of loan which is utilized by many organizations for
taking money. Many short-term business loans are comes in the category of unsecured,
that means established organization credit rating qualifies it for a loan. The mostly
common types of collateral utilized for short-term credit are inventories and account
receivable. It is a effective source to borrow on an unsecured basis, but frequently a credit
rating of borrower is not strong enough for justifying an unsecured loan.
 Commercial banks – This type of loan is appearing on the balance sheet in the form of
note payable and it is highly important to trade credit in the form of short-term source of
financing. Banks gained a particualar position in the short-term (Bakhtiar, 2021). and
intermediate-term money markets. As a compaany's financing requirements grow, banks
are providing additional money. The organization signed a conventional promissory note.
Repayment is done according to lump sum at installments throughout the life of the loan.
From the above analysis the long term loans is suggested to organization for running
their business functions smoothly in long term. Because in this type of loans risk are very less
and performance of firm is easily sustained at higher rate.

CONCLUSION
After the analysis of above data it concludes that finacial management plays the crucial
role in the business activities of organization. For example witrh help of effective financial
management company is able to control their cost in their machines and prodction process. It
also assist the firm for using the resources in optimized manner. The report will covered describe
the role of financial manger within organization and the sources of finance.

REFERENCES
Books and Journals
Al-Blooshi, L. and Nobanee, H., 2020. Applications of artificial intelligence in financial
management decisions: A mini-review. Available at SSRN 3540140.
Azar, J., Raina, S. and Schmalz, M., 2022. Ultimate ownership and bank competition. Financial
Management, 51(1), pp.227-269.
Bakhtiar, B., 2021. Accountability and Transparency in Financial Management of Village Fund
Allocations in Achieving Good Governance. ATESTASI: Jurnal Ilmiah
Akuntansi, 4(2), pp.230-245.
Jagtiani, J. and Lemieux, C., 2019. The roles of alternative data and machine learning in fintech
lending: evidence from the LendingClub consumer platform. Financial
Management, 48(4), pp.1009-1029.
Myende, P.E., Bhengu, T.T. and Kunene, I.S., 2020. School financial management development
programme for Eswatini principals: Lessons, challenges and implications. South
African Journal of Education, 40(4).